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Appraisal of Dairy Project

APPRAISAL OF DAIRY PROJECT- An Example

For dairy schemes with very large outlays, detailed reports will have to be prepared. The items of finance would include capital asset items such as purchase of milch animals, construction of sheds, purchase of equipments etc. The feeding cost during the initial period of one/two months is capitalised and given as term loan. Facilities such as cost of land development, fencing, digging of well, commissioning of diesel engine/pumpset, electricity connections, essential servants' quarters, godown, transport vehicle, milk processing facilities etc. can be considered for loan. Cost of land is not considered for loan. However, if land is purchased for setting up a dairy farm, its cost can be treated as party's margin upto 10% of the total cost of project.

The scheme should include information on land, livestock markets, availability of water, feeds, fodders, veterinary aid, breeding facilities, marketing aspects, training facilities, experience of the farmer and the type of assistance available from State Government, dairy society/union/federation.

The scheme should also include information on the number of and types of animals to be purchased, their breeds, production performance, cost and other relevant input and output costs with their description. Based on this, the total cost of the project, margin money to be provided by the beneficiary, requirement of bank loan, estimated annual expenditure, income, profit and loss statement, repayment period, etc. can be worked out and shown in the Project report.

Technical Feasibility - this would briefly include -

Nearness of the selected area to veterinary, breeding and milk collection centre and the financing bank's branch.

Availability of good quality animals in nearby livestock market.

Availability of training facilities.

Availability of good grazing ground/lands.

Green/dry fodder, concentrate feed, medicines etc.

Availability of veterinary aid/breeding centres and milk marketing facilities near the scheme area.

Economic Viability - this would briefly include -

Unit Cost

Input cost for feeds and fodders, veterinary aid, breeding of animals, insurance, labour and other overheads.

Other documents such as loan application forms, security aspects, margin money requirements etc. are also examined. A field visit to the scheme area is undertaken for conducting a techno-economic feasibility study for appraisal of the scheme.

Repayment Period of Loan

Repayment period depends upon the gross surplus in the scheme. The loans will be repaid in suitable monthly/quarterly installments usually within a period of about 5 years. In case of commercial schemes it may be extended upto 6-7 years depending on cash flow analysis.

Insurance

The animals may be insured annually or on long term master policy, where ever it is applicable. The present rate of insurance premium for scheme and non scheme animals are 2.25% and 4.0% respectively.

Package of Common Management Practices Recommended for Dairy

Farmers

Modern and well established scientific principles, practices and skills should be used to obtain maximum economic benefits from dairy farming. Some of the major norms and recommended practices are as follows :

Housing:

Construct shed on dry, properly raised ground.

Avoid water-logging, marshy and heavy rainfall areas.

The walls of the sheds should be 1.5 to 2 meters high.

The walls should be plastered to make them damp proof.

The roof should be 3-4 metres high.

The cattle shed should be well ventilated.

The floor should be pucca/hard, even non-slippery impervious, well sloped (3 cm per metre) and properly drained to remain dry and clean.

Provide 0.25 metre broad, pucca drain at the rear of the standing space.

A standing space of 2 x 1.05 metre for each animal is needed.

The manger space should be 1.05 metre with front height of 0.5 metre and depth of 0.25 metre.

The corners in mangers, troughs, drains and walls should be rounded for easy cleaning.

Keep the newly purchased animal under observation for a period of about two weeks and then mix with the general herd.

Purchase a minimum economical unit of two milch animals.

Purchase the second animal/second batch after 5-6 months from the purchase of first animal.

As buffaloes are seasonal calvers purchase them during July to February.

As far as possible purchase the second animal when the first animal is in its late stage of lactation and is about to become dry, thereby maintaining continuity in milk production vis-a-vis income. This will ensure availability of adequate funds for maintaining the dry animals.

Follow judicious culling and replacement of animals in a herd.

Cull the old animals after 6-7 lactations.

Feeding of Milch Animals

Feed the animals with best feeds and fodders.

Give adequate green fodder in the ration.

As far as possible, grow green fodder on your land wherever available.

ANNEXURE III

Unit cost of cows and buffaloes Approved by NABARD in some of the major States in India

SNo

State

Cows

Buffaloes

Unit Cost (Rs.)

Breed

Yield

(litres/

day)

Unit cost (Rs.)

Breed

Yield (liters / day)

1

2

3

4

5

6

7

8

1

Andhra Pradesh

6,000

7500

9500

Crossbred

Crossbred

Crossbred

6

8

10

7,500

10000

-

Graded Murrah

Graded Murrah

6

8

-

2

Assam

10,000

Crossbred

7

8,500

Graded Murrah

7

3

Bihar

13,000

Crossbred

10

9,000

Graded Murrah

7-8

6,000

Indigenous

5-6

7,000

Local (improved)

5-6

4

Gujarat

i)

14,000

Jersey X

8-9

i)

13,500

Surti

5.5

ii)

16,000

H.F.X

9-10

ii)

13,000

Mehsani

6

iii)

14,000

Jaffarabadi

6

5

Karnataka

i)

7,300

Crossbred

6

i)

6,600

Graded Surti

5

ii)

9,700

Crossbred

8

ii)

7,800

Graded Murrah

6

iii)

10,900

Crossbred

9

iii)

9,000

Pandarpuri

7

iv)

12,100

Crossbred

10

iv)

11,000

Pure Mehsani

8

6

Madhya Pradesh

i)

9,500

Jersey X

i)

7,000

Graded Murrah

6

ii)

6,500

Gir/Tharparkr/Sahiwal

8

ii)

8,250

Graded Murrah

7

7

iii)

6,000

Nagpuri

5

7

Maharashtra

i)

11,200

Crossbred

6

i)

7,000

GMB/Mehsani

7

ii)

14,000

Crossbred

10

ii)

8,000

GMB/Mehsani

8

iii)

8,400

Tharparkar/Gir/Hariana

6-7

iii)

6,000

Surti/Jaffarbadi

6

to

iv)

7,000

Nagpuri/ Dharwari

7

9,500

v)

5,000

Pandharpuri

5

vi)

6,000

6

8

West Bengal

i)

9,500

Crossbred

6

-

-

-

ii)

12,000

Crossbred

8

-

-

-

9

Orissa

i)

6,000

Crossbred

6

6,300

Graded Murrah

6

ii)

7,000

-do-

7

iii)

8,000

-do-

8

10

Punjab/Haryana

i)

2,700

Indigenous

5

ii)

7,950

Crossbred(J)

9

i)

7,450

Murrah

7

8,900

-do-(HF)

10

ii)

6,500

Graded Murrah

6

11

Rajasthan

i)

10,400

-do-

8

11,200

Graded Murrah

7

ii)

11,700

-do-

9

9,000

Surti

6

iii)

13,000

-do-

10

12

Uttar Pradesh

10,000

Crossbred

10

11,000

Graded Murrah

8

13

Kerala

6,000

Crossbred

6

7,200

Graded Murrah

6- 6.5

8,000

Crossbred

8

14

Himachal

6,600

Crossbred

8

9,000

Graded Murrah

6

15

Tamil Nadu

8,250

Crossbred

6

9,800

Graded Murrah

6

Hand out relevant for Programmes on Financing Agriculture, RDPC etc prepared by C P Mohan, Deputy General Manager and Member of Faculty, Reserve Bank of India, College of Agricultural Banking, Pune. The handout is Developed based on the Model Schemes prepared by NABARD.